The Internet of Things (IoT) is an expansive network of connected sensors and smart devices combined with advanced analytics to draw insights from the data they produce in order to monitor equipment and improve services. Among other things, smart devices include wearables, smart home mechanisms (such as thermostats and lighting controls), connected cars and industrial equipment. As a category, they are experiencing a compound annual growth rate of 20%, and some experts predict that there will be 50 billion connected things by the year 2020. Many smart devices are shifting analyses and services to the edge—or close to the source of data rather than the data center. Certain autonomous machines such as robots, drones and autonomous cars can process data locally. Manufacturers of these devices are not only makers of a component of the IoT but entities with a unique connection to, and insights into, customers. Potential barriers to growth of the IoT include concerns about data security, the ability to operate across devices and systems, cost, and the difficulty of integrating new and existing operations. Still, nearly every industry is exploring emerging opportunities to capitalize on the IoT.
Usage and satisfaction among survey respondents
How the IoT works:
- Sensors and devices built into consumer goods (such as smart thermostats) and industrial equipment (such as gas turbines) collect data about how they are functioning and their environment.
- Networks connect that data to analytic engines, generally in the cloud, where both people and machines can interpret and mine the information for insights, often in combination with other sources of data.
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Companies use the IoT to:
- Create and obtain data on their business and customers
- Monitor equipment performance to improve management, maintenance and replacement decisions
- Reduce waste and cost of materials
- Improve employee efficiency
- Broaden product and service offerings (for instance, equipment makers adding services that evaluate when a machine requires maintenance); expand relationships with customers
- Establish partnerships with adjacent industries
- Perform analysis close to the source of data (for example, evaluating real-time customer experiences in stores or monitoring patients in hospitals)
- Automate systems
Many industries are investing in the IoT:
- Automakers are competing to develop IoT-enabled applications such as autonomous driving systems.
- Telcos are building services to secure and maintain networks of connected devices for services such as patient monitoring in hospitals and quality control in factories.
- Mobile platform providers such as Apple, Google and Samsung are promoting smart home technologies, smart watches and other consumer technologies.
Five key trends emerged from Bain's survey of 1,268 managers.
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